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Saudi opts to miss non-Opec producers meeting

Saudi Arabia will not attend a meeting with non-Opec producers such as Russia and Kazakhstan on Monday, arguing it is pointless to gather when the 14-member oil cartel has not yet reached a deal itself.

Opec ministers are due to meet next week to try and hammer out the details of the first supply cuts since the financial crisis but Iran and Iraq are still presenting potential roadblocks to a deal.

“Since Opec has not reached agreement, there is no need to have a meeting with non-Opec,” said a person familiar with Saudi policymaking. “If these problems are still ongoing, so what is the point of meeting.”

The person said Saudi Arabia would continue discussions with Opec peers and could meet countries outside the cartel, should they reach an agreement. “Opec must solve its own problems first,” he said.

At a meeting in Algiers two months ago, Opec agreed to curb production to a level between 32.5m barrels a day and 33m b/d. But how cuts — of at least 800,000 b/d — would be distributed is still being resolved before the next meeting of ministers on Wednesday.

Iran, which is recovering after years under western sanctions, believes it should be treated as a special case without any output restraints, similar to strife-ridden Libya and Nigeria, two people familiar with the matter said.

Delegates had been expecting Iran to freeze at pre-sanctions production levels, around 4m b/d, but Tehran has not yet publicly committed to any such deal.

Meanwhile, Iraq, which is fighting an expensive war against Islamic State, has reluctantly said it would participate in an output reduction, although there was little clarity from which level it would do so and how much it was willing to cut. It has until now disputed the underlying figures from which any curbs would be calculated.

Algeria’s energy minister Noureddine Bouterfa will meet Iranian officials this weekend ahead of further talks between Opec delegates in Vienna on Monday.

Russia, the largest oil exporter outside Opec, has said the cartel must reach a consensus before involving producers not in the cartel.

Reuters first carried the news that Saudi Arabia would not attend Monday’s meeting with non-Opec but did not give a reason why the country had chosen not to participate.

Brent crude was down 1.7 per cent after the news at $48.18 a barrel, close to its lowest of the day. In recent weeks oil prices have staged a recovery in expectation of a deal, but discussions are going down to the wire.

“[If] no agreement is reached and all hell breaks loose oil prices would nosedive well below the $40 a barrel,” said Tamas Vargas at London-based broker PVM. “If member countries produce flat-out, prices could even fall as low as $30 a barrel”.

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